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Orsted has lowered the long-term financial target for its next UK offshore wind farm – and six others in the global portfolio – as it addresses “underestimated factors” impacting on production.

Hornsea Two, on track to be built out from the Humber by the first half of 2022, has had half a per cent shaved off its anticipated rate of return of 7.5 to 8.5 per cent, as blockage and wake effects on wind passing through the arrays are realised in greater detail.

The Danish giant has warned it will be an industry-wide issue. The lifetime load factor of 48 to 50 per cent now focuses on the base figure after adjustment of production forecasts.

Shares dropped 7 per cent.

It came as third quarter results revealed how Hornsea One’s ramp up had boosted earnings in the first nine months for the Danish giant, and how Race Bank Extension – a potential further 573MW addition to the Grimsby operated and maintained cluster – has not as yet been awarded an agreement for lease from The Crown Estate.

Hornsea zone location map. (Image: Orsted)

Operating profit for the first nine months increased by 19 per cent and amounted to DKK 12.9 billion (£1.48b), in line with expectations and “well on track” to reach our full-year guidance of DKK 16-17 billion. (£1.84b to £1.96b).

In the third quarter alone, which saw Hornsea One installation complete, earnings from offshore wind farms increased by 23 per cent.

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Detailing comprehensive work to upgrade models and processes used to forecast the energy production from farms, a company spokesperson said: “The project has led us to conclude that our current production forecasts underestimate the negative impact of two effects across our asset portfolio.

“The blockage effect arises from the wind slowing down as it approaches the wind turbines. There is an individual blockage effect for every turbine position and a global effect for the whole wind farm, which is larger than the sum of the individual effects. Our new wind simulation models show that we have historically underestimated these blockage effects. This finding is also supported by industry consultant DNV GL’s recent report on blockage, which indicates that this effect is more broadly underestimated.

Hornsea One being built out. (Image: Orsted)

“The second effect is the wake within wind farms and between neighbouring wind farms. There is a wake after each wind turbine where the wind slows down. As the wind flow continues, the wake spreads and the wind speed recovers. This effect, with wind turbines shielding and impacting each other, has been subject to extensive modelling by the industry for many years, and it is still a highly complex dynamic to model. Our results point to a higher negative effect on production than earlier models have predicted.”

A new model to accurately predict wake effects over longer distances is being developed, with the company warning that “as the global offshore wind build-out accelerates, the whole industry will see higher wake effects from neighbouring wind farms”.

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Orsted said its estimates have always been more cautious than third parties, with it only emerging now from harvested production deviation data, having been hidden by wind-strength, curtailments and availability previously.

“While there is still uncertainty involved, it is clear that the production forecast adjustment arising out of our analysis has a negative effect on our financial estimates,” the spokesperson added. “While the production adjustment is negative we are convinced that Ørsted’s access to data and advanced analytics will be a driver of our long-term competitive advantage. We will, of course explore how the recent findings may translate into improvements to our design and lay-out of future wind farms.”

Site earnings and return on capital remain unchanged, with other affected wind farms are in Dutch, German, Tiawanese and US waters.

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Update on August power cut incident

The worst power cut for a decade is under investigation, with the link, systems and operators between the lights going out and generators Hornsea One offshore wind farm and Little Barford gas-fired power station being looked at. (Image: PA / Orsted / Google Maps)

Further detail has also emerged on the “rapid reduction of power” at Hornsea One that contributed to a huge power cut in the UK in August.

Lightning strikes on the National Grid saw output from both the emerging world-leading offshore wind farm, and a gas-fired power station in Cambridgeshire lost, forcing a strategic plan to come into force.

In his update to investors, Henrik Poulsen, chief executive and president, said: “In August, during an unusual set of circumstances affecting the transmission grid, we experienced a rapid reduction of power at Hornsea One.

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“This was caused by an unexpected control system response only revealed during these unusual circumstances and has now been resolved. Hornsea One is progressing through the necessary compliance tests with National Grid and expects by mid-November to lift maximum export from the current 800MW to the full 1,218MW.”

He told how higher than normal outages and curtailments – reported in the half year results – had persisted into the third quarter, but “have now to a large extent been resolved”.

Orsted has confirmed discussions continue with The Crown Estate in relation to the Race Bank Extension.